Inflation is now eroding Perth house prices after another fall in values through July.
New figures from RP Data-Rismark showed house values dropped by 0.6 per cent last month.
So far this year they are down by 0.9 per cent.
Over the past 12 months, house values are still in positive territory, up by 2.6 per cent. But once inflation is taken into account, running at 3.3 per cent, house prices are going backwards in real terms.
It’s a better story for owners of units with values up by 1.4 per cent over July to be 5.3 per cent better through the past 12 months.
Nationally, Perth was the worst performed capital in the country values up by 1.6 per cent in Sydney and by 4.1 per cent in Melbourne.
Sydney house values have now climbed by 15.3 per cent over the past year while in Melbourne they are up by 11.7 per cent. Even in the Brisbane-Gold Coast area and Adelaide, values are running faster than inflation.
RP research director Tim Lawless said it was clear the peak in the capital city housing market had been reached and was now moving back.
“With interest rates remaining low and fixed rates seeing further downwards pressure, we are expecting that capital gains will continue into the foreseeable future,” he said.
“What is likely though is that the rate of capital gain will continue to reduce, particularly in those cities where affordability constraints are the most significant and rental yields are the lowest.”
Mr Lawless said any slowdown in market conditions was likely to be gradual, with signs that auction clearance rates remained strong.